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United Defense's bank debt strengthened in the wake of the Sept. 11 attacks, hitting 1011/ 8 from a previous 1001/ 4 level. About $5 million was swapped in a single trade. Dealers said the reasons were obvious in light of possibly military action by the U.S. "Anyone with a military budget is going to thrive," said a dealer. The Arlington, Va.-based company manufacturers combat vehicles. Francis "Buzz" Raborn, cfo, was away on business with other officials in the company. A spokesman was not available.

Wyndham International's term loan "B" softened to 90-93--down about three points-- and the company's increasing rate loan sunk to the 94-95 range. The credit has dropped from levels prior to the World Trade Center attack. Wyndham, a hotel chain, had been trading up to the 991/ 4 range until early this month. A rumored buyout from Bass Hotels supported the levels, but dealers said the hotel industry will be among the hardest hit by the attacks on New York and Washington. Calls to Richard Smith, cfo, were not returned. Darcie Broussart, spokeswoman, also did not return calls.

Institutional investors in the leveraged loan market were quick to point the finger at lodging and Las Vegas-based casinos as worrisome parts of the portfolio as a significant shift in levels emerged following the World Trade Center and Pentagon attacks. Credits such as Wyndham International, Starwood Hotels, Extended Stay, Mandalay Resort Group, Venetian Casino Resort, and MGM Mirage were all eyed carefully last week as loan investors have exposure to the lodging sector and specifically see Las Vegas-based businesses as especially vulnerable to both airline and resort trends.

The Loan Syndications and Trading Association pushed the industry to allow settlement times to overrun in order to encourage liquidity and not penalize firms struck by the terror attack on the World Trade Center. The request came at a Sept. 14 meeting between board members of the LSTA and representatives from leading banks. Allison Taylor, executive director, said market players were eager to show solidarity and ensure liquidity is there, pricing is accurate and available and settlement procedures are adjusted to allow for companies that are displaced and may be unavailable to meet settlement deadlines. "People want business to return, though not necessarily as usual," Taylor noted.

The Loan Syndications And Trading Association is considering the establishment of a standard leveraged loan credit agreement to reduce costs for borrowers and shorten the time it takes to originate a loan. Additionally, the LSTA is considering creating a CDO committee and a pricing service for investment grade loans. The timetable on these issues may be adjusted in the wake of the Sept. 11 terrorist attacks, said Allison Taylor, executive director.

Lyondell Chemical Company "B" paper traded down to 97 1/8 from a high of 101 last week. An estimated total of $10 million traded. The sharp downgrade in levels was attributed to a cyclical chemical sector and the volatile market, which was heightened by the World Trade Center attacks. "The chemical sector is very cyclical and sensitive to oil prices," a dealer explained. "Bonds and stocks are down, the market is down, and liquidity is reasonably low, so that all translates into lower bids." The Houston-based company makes polymers and petrochemicals. Calls to Robert Blakely, cfo, were referred to investor relations director Patrick Quarles, who declined to comment.

Market players pointed fingers in different directions in response to the location of Merrill Lynch's syndication group, which was displaced after the attack on the World Trade Center. Various answers put the group in New Jersey, operating out of a fellow banker's apartment, or working from home individually. Early last week, some market sources insisted the group was working from the apartment of Jack Yang, the head of leveraged finance products for Merrill. A Merrill Lynch official said staffers who live near Yang were there for a couple of days while others worked from home. The group has plans to move to the firm's contingency site in Jersey City by the end of the week. "There are 200 people in New Jersey and that number will double and triple in time," he said. He added that the loan group is very much intact and open for business. He noted the trading group is also stationed in New Jersey while the capital markets and originations groups are located at various law offices throughout the city with which the firm has relationships.

A $10 million piece of Owens Corning's bank debt traded in the 70-71 range, notching down about a point from previous levels. One dealer speculated levels were even softer, closer to the 69 context. Traders said distressed trading was even more sparse than par activity, but that buyers were looking into credits which were defensive and could show a return. They put Owens Corning in that category because there was increasing demand for the paper even before the Sept. 11 attack. A dealer explained that the bid moved higher than the offer for Owens Corning last week, sparking the trade. "It traded because there was a lot of demand pre [the attack]," a dealer explained. Owens Corning is a fiberglass manufacturer based in Toledo, Ohio.

Unusually wide spreads in the secondary market locked up trading for much of last week, but by Thursday paper was trading as the market began to find levels. Dealers noted that the typical gap between bids and offers is about two points, but that had ballooned to four or five points on many names last week, the first full week back from the terrorist attacks of Sept. 11. "Sellers don't want to feel they will get picked off or that they are panic sellers," one dealer said. "They say, 'the market shouldn't have moved back that much, so I'm not going to offer now.'" The result is bids that can back up as much as six points and offers that move down a point, which results in stagnant market.

Crédit Lyonnais this week closed its long waited Asian collateralised bond obligation parcelling Asian and emerging market bonds managed by OUB Asset Management of Singapore. The leads originally intended to price the deal the previous week but it was delayed by several days because of events in the US. The order book remained largely unaffected, however, and the transaction was able to proceed this week with the same investor base.

Interstar Securities (Australia) Pty Ltd yesterday (Thursday) launched the largest RMBS ever offered in the Australian domestic market. Despite recent events in the US and some uncertainty in the financial markets lead manager Macquarie Bank does not expect the notes to price wider than recent MBS issues.